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CN under and CP over Western Grain Revenue Caps for Crop Year 2012-2013

OTTAWA – December 16, 2013– The Canadian Transportation Agency today issued Decision No. 461-R-2013 ruling that the revenues of the Canadian National Railway Company (CN) are under its maximum revenue entitlement and that the Canadian Pacific Railway Company (CP) has exceeded its revenue cap for crop year 2012-2013.

CN's grain revenue of $556,589,140 was $6,346,256 below its revenue cap of $562,935,396

In the 2012-2013 crop year, just over 32.4 million tonnes of western grain were moved, which is 2.0 percent lower than the volume moved during the previous crop year. As well, the average length of haul of 944 miles was 8 miles, or 0.8 percent lower than the previous crop year.

CP now has 30 days to pay the amount by which they exceeded their 2012-2013 revenue cap, in addition to a five percent penalty of $8,898. Government regulations stipulate that such payments must be made to the Western Grains Research Foundation, a farmer-financed and directed organization set up to fund research that benefits Prairie farmers.

Determining the Revenue Cap

The Canada Transportation Act requires the Agency to determine each railway company's revenue cap annually and whether each cap has been exceeded. The revenue cap is a form of economic regulation that enables CN and CP to set their own rates for services, provided the total amount of revenue collected remains below the ceiling set by the Agency.

Revenue caps are calculated using a formula containing numerous elements which are established by the Act. The Volume‑related Composite Price Index (VRCPI) is one of these elements and is determined by the Agency, no later than April 30 every year. The VRCPI is an inflation index which reflects forecasted price changes for railway labour, fuel, material and capital purchases by CN and CP, the two federally-regulated railways. The index, along with the actual tonnage of grain that was hauled and the average length of haul during the crop year for each railway, is used to determine the annual revenue caps. .../2

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The Canadian Transportation Agency is an independent administrative body of the Government of Canada. It performs two key functions within the federal transportation system:

As a quasi-judicial tribunal, the Agency, informally and through formal adjudication, resolves a range of commercial and consumer transportation-related disputes, including accessibility issues for persons with disabilities. It operates like a court when adjudicating disputes.

As an economic regulator, the Agency makes determinations and issues authorities, licences and permits to transportation carriers under federal jurisdiction.

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For more information on the Agency’s revenue cap determinations since 2000-2001, please see the Western Grain Revenue Cap Statistics Backgrounder.